In premarket trading Friday, Nvidia Corporation (NASDAQ:NVDA) shares hovered near $208, roughly 0.4% below Thursday's close, as U.S. cash markets remained closed. The stock has risen 2.9% since last Friday, outperforming the Nasdaq Composite, which declined 1.5% over the same period. However, Nvidia's gains lagged the broader semiconductor sector, with the PHLX Semiconductor Index climbing 5.7%.
Data from July 17 to July 23 shows Nvidia's closing price advanced from $202.81 to $208.76, a 2.9% increase. During the same span, the PHLX Semiconductor Index rose from 11,673.89 to 12,343.84, a 5.7% gain, while the Nasdaq Composite slipped from 25,520.24 to 25,137.69, down 1.5%. Nvidia outperformed the Nasdaq by 4.4 percentage points but lagged the chip index by 2.8 points.
This divergence suggests an internal rotation within the AI investment landscape. While investors continue to favor AI infrastructure, capital is increasingly dispersing throughout the supply chain. Micron Technology Inc. (NASDAQ:MU) shares rose 3.2% on Thursday, while Nvidia dropped 1.56% and the semiconductor index fell 0.54%.
Alphabet Inc. (NASDAQ:GOOGL) provided the week's key challenge, raising its 2026 capital expenditure outlook by $15 billion to a range of $195 billion to $205 billion. Despite this, Alphabet's stock declined 7.1%. The company posted a quarterly free cash flow deficit of $5.9 billion, and its capital expenditure as a share of revenue reached 41%, up from 23% previously. Charu Chanana at Saxo Markets noted that investors may scrutinize cash deployed simply to remain competitive, with calls for AI-generated revenue to exceed both capex and operating expenses.
Nvidia now faces heightened expectations beyond mere budget increases. The company needs spending to translate directly into orders for its own products, rather than custom chips or competitor platforms. Advanced Micro Devices Inc. (NASDAQ:AMD) intensified the competitive landscape on Wednesday, with Anthropic committing to purchase up to two gigawatts worth of MI450 systems beginning in 2027. AMD may also provide up to $5 billion in investment, with server sales potentially reaching tens of billions of dollars. EMarketer analyst Jacob Bourne stated that with every success, AMD's credibility as the number-two to Nvidia grows. However, the rollout begins in 2027, limiting near-term revenue impact for Nvidia.
Nvidia's operational strength remains evident. First-quarter revenue for the fiscal period reached $81.6 billion, an 85% year-over-year increase, with data-center revenue climbing 92% to $75.2 billion. The company forecast second-quarter revenue at $91 billion, with a possible variation of 2%. Chief Executive Jensen Huang stated that Nvidia should be growing faster than hyperscale capex.
Looking ahead, Microsoft Corp. (NASDAQ:MSFT), Meta Platforms Inc. (NASDAQ:META), and Amazon.com Inc. (NASDAQ:AMZN) are scheduled to report next week. Their investment outlooks will reveal whether Alphabet's tighter cash flow is an anomaly or part of a broader trend. The Federal Reserve is set to announce its rate decision on Wednesday, with PCE inflation data due Thursday. Early pricing Friday indicated about a one-in-three probability of a rate hike.
Risks to Nvidia's growth outlook include potential reductions in capital expenditures, advances in custom-chip technology, or more restrictive financial environments. China remains a limiting factor, as the company's quarterly guidance does not include data-center compute revenue from China. Nvidia is set to release fiscal second-quarter results on August 26. Ahead of that date, investors might favor individual chip suppliers instead of automatically opting for the leading AI company.
